The limits of more education

No less than Federal Reserve Chairman Alan Greenspan said in recent testimony that the United States has “a shortage of highly skilled workers and a surplus of lesser-skilled workers.”

What you won’t find, however, is a great deal of evidence to support the claim.

What’s been happening to college-educated workers proves the point. A college diploma, and the high level skills it signifies, should be a sure-fire ticket for getting and keeping a good job. But the ranks of unemployed college-educated workers are large and growing – in 2003 they made up 19 percent of those who were out of work for six months or longer.

Job market stagnation has eaten away at the wages of recent college-educated workers, too. Between 1996 and 2001, the real wages of recent college grads were on the rise, but since 2001 they’ve fallen slightly.

The problem is the lack of job creation in the occupations and industries that tend to employ them.

Don’t get us wrong: Highly educated workers are far more likely to be employed and to be better compensated than those with less education.

The question is, will future demand keep up with rising graduation rates?

Here’s where the accelerated practice of offshoring creates a new and prodigious challenge. Technological advances in computing and telecommunications combine with a huge pool of relatively highly skilled workers in other countries to put educated U.S. workers in direct competition with foreign workers who can do the work for much lower wages.

It is not at all clear that there’s a shortage of highly skilled U.S. workers. And educating and retraining these workers won’t stimulate higher demand here for college-educated workers.

These workers are among the most highly educated in our country, if not the world. Raising their skills even further is worthwhile but not a panacea for their problems.

While investments in education are critical to our economic future, they are not sufficient. If we are to have good jobs for our educated work force we must control the loss of jobs to imports and do more to create jobs here at home, in export industries, in the public sector and in private research and development.